Kerrison, B. v Official Trustee in Bankruptcy

[1990] FCA 597

Re: BAIBA KERRISON Ex Parte OFFICIAL TRUSTEE IN BANKRUPTCY
And: Dr. JOHN JAMES KERRISON
No. SB591 of 1987
FED No. 597
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA
GENERAL DIVISION
O'Loughlin J.(1)

CATCHWORDS

Bankruptcy - Contempt of Court - s.129 - failure to pay to the trustee moneys that were required to be paid pursuant to sub.s 129(4) - order of three months imprisonment.

HEARING

ADELAIDE

#DATE 15:8:1990

Counsel for the Trustee: Mr S. Adams

Solicitor for the Trustee: Messrs Adams and Gilbertson

Respondent: Without counsel

Dr J.J. Kerrison for himself

ORDER

Dr. John James Kerrison be imprisoned for a term of three calendar months.

This order be stayed for four calendar months.

There be liberty to either party to apply on short notice.

The matter be adjourned for mention on 13 December 1990 at 9.00 a.m.

A notice, as approved by the Registrar, be signed by the solicitors for the applicant, informing Dr. Kerrison that he may apply to the Court at any time and from time to time, before or after his arrest, for an order purging his contempt.

This order and the notice shall be served personally on Dr. Kerrison at or prior to his arrest.

There be liberty to both parties to speak to the Minutes of Order.

Note: Settlement and entry of order is dealt with in Bankruptcy Rule 124.

JUDGE1

On 1 June 1990 I published my reasons in support of my finding that Dr. Kerrison must be classified as a person who has not paid to the applicant, the Official Trustee in Bankruptcy, the sum of $9,000 as required by the provisions of sub-s. 129(4) of the Bankruptcy Act. I adjudged that he was therefore guilty of contempt of court. I will not now repeat any of the findings of fact that I set out in those reasons, but I adopt all that I said and I treat these remarks as a continuation of my above mentioned remarks.

1. Having listened to Dr. Kerrison address the court on numerous occasions over an extended period of time, I am quite satisfied that he is a man of above average intelligence and aptitude. Without the benefit of legal representation he has made a study of the branches of the law that were relevant to the issues in these proceedings. His labours showed, not only an ability to identify, but the additional ability to expound accurately upon such matters as the standard of proof, the use of the word "money" in the Bankruptcy Act and whether that word, where used in s.129, can extend to property that is not divisible among the creditors of a bankrupt.

2. But marching in parallel with that display of intelligence was a streak of obduracy, the like of which I have never before experienced in six years of judicial office. Dr. Kerrison is aware of the consequences of my earlier finding. He knows that he faces the prospect of a term of imprisonment, but I regret to say that it is my assessment of him that the thought of imprisonment will not deter him. I hope that events will prove me wrong, for it is a tragedy that a man of his age and in his circumstances should be sent to prison.

3. I suspect that the money is no longer what is at stake. Having heard and read so much of this matter and its history, I believe that Dr. Kerrison and his wife see themselves as the innocent victims of unfair harassment, first at the hands of the Deputy Commissioner of Taxation, their petitioning creditor, and more recently at the hands of the Official Trustee in Bankruptcy. They have had their mail intercepted and their premises searched. On an earlier occasion Mrs. Kerrison was under threat of being cited for contempt. No doubt, these proceedings are viewed by them as just another example of the unfair treatment that they feel that they must endure. Although these and other matters were alluded to during the course of these proceedings, none of them were the subject of evidence or inquiry. My reference to them is limited to the exclusive purpose of seeking some explanation for Dr. Kerrison's conduct.

4. Mr. Adams, counsel for the Official Trustee, raised a matter during the course of his submissions which has given me some concern. He said that it was his belief that Dr. Kerrison is unemployed and that it is possible that some or all of the $9,000 may have been expended in legitimate living expenses for the members of the Kerrison family. If such should be the case, Mr. Adams acknowledged the possibility that Dr. Kerrison might not be able to pay over the $9,000 even though he might have a change of heart and wish to do so. The payment of the $9,000 to the Official Trustee was and remains, no doubt, one of the objectives of these proceedings and, if Dr. Kerrison made the payment, it would be accepted by the court as a purge of his contempt.

5. But there is, however, another objective in contempt proceedings which is of paramount importance. It is the upholding and the vindication of the law. If a person so conducts himself that he is guilty of contempt, it is essential for the purposes of precedent that that person and all other members of the community know that the full force of the law will be brought to bear either by way of punishment, or by the purging of the contempt, or both. However, punishment in isolation is not always a necessary and inevitable consequence of contempt.

6. On numerous occasions the court has considered an unqualified apology to be sufficient. If, therefore, Dr. Kerrison seeks to avail himself of the opportunity he should know that his inability to repay the $9,000 or some part of it, should that be the case, need not necessarily constitute an impediment to a resolution of this matter. The court would, of course, need to be satisfied by evidence on oath that the act of contempt was acknowledged and that an apology was forthcoming. It would need to know the reasons why it was not possible to repay all the money, and those reasons would need to be supported with some detail. These remarks have been designed to establish that punishment for contempt of court is not the only matter to which the court directs its attention.

7. I endeavoured to explain in my judgment that this form of statutory contempt is not intended to deprive a person in Dr. Kerrison's position of his right to put the Official Trustee to proof. In a sense, this contempt did not crystallize until 1 June 1990 when I published my judgment, even though it may well have occurred, when one applies hindsight, on the occasion of Dr. Kerrison's failure to make the requisite payment of the moneys. To this I recognize the predicament which has been brought about by Dr. Kerrison's lodgment of an appeal to the Full Court against my judgment. Naturally he wishes to protect his position pending the outcome of that appeal. Although the normal rule is that an appeal does not operate as a stay of proceedings, Mr. Adams has informed me that the Official Trustee would consent to me staying the operation of any order that I might make pending the determination of the appeal. I think that the peculiar circumstances of this case warrants such a course of action, so as long as I remain assured that the appeal is being prosecuted with due diligence.

8. There remains for final determination the nature of the order that I should make. I have adjudged Dr. Kerrison to be a person who had possession of $9,000 that he was not by law entitled to retain against the interests of his wife, the bankrupt, or the Official Trustee. Payment of this sum was demanded of him but he failed to meet the demand. Proceedings were instituted against him seeking an order that he be adjudged guilty of contempt. He fought those proceedings vigorously. To his credit, I note that he made no attempt to swear falsely that he did not have the money.

9. He is 64 years of age. He is a retired medical practitioner living with his wife and those of his seven children who are still at home. He has informed me that he does do some part-time medical work which brings in about $40 per week. Those of the children who are at home pay board equivalent to the rent of the property and also pay the electricity. Mrs. Kerrison is in employment as a registered nurse and it would seem to me that, subject to what I have just said, it is her income which is the main source of support for herself and Dr. Kerrison. I gather from what Dr. Kerrison has told me, that the children each meet the cost of their own clothes.

10. I informed Dr. Kerrison of his right to adduce medical and character evidence in support of, and as part of, any submissions that he might care to make with respect to the orders that I must consider. He informed me that he regarded himself as being in good health and he did not seek to avail himself of the opportunity of calling medical or character evidence. Nothing has been put to me to the contrary and I therefore proceed to conclude my remarks upon the premise that he can be regarded as a man of good character. Irrespective of the issue of causation, I am satisfied that he, and more so, Mrs. Kerrison have suffered severe emotional trauma as a result of these proceedings. I intend to take those factors into account.

11. I have come to the conclusion that a term of imprisonment is the appropriate order for me to make. I acknowledge that to a man of his age and background such will be a dreadful consequence. It will also cause great pain to his wife and family. I remain hopeful that he will avail himself of the opportunity to purge his contempt. But allowing for that not happening the order of the court is that Dr. John James Kerrison be imprisoned for a term of three calendar months.

12. This order is subject to a stay of four calendar months in the expectation that Dr. Kerrison's appeal might have been dealt with by that date. If it has not but I am otherwise satisfied that any delay is not the fault of Dr. Kerrison I intimate now that I will be disposed to order an extension of this stay that I have just stated.

13. I further order that Dr. Kerrison pay the costs of these proceedings. There will be liberty to either party to apply on short notice and I list this matter for mention on 13 December 1990 at 9.00 a.m.

14. The order is to be drawn up and served personally on Dr. Kerrison at or prior to the time of his arrest should that event occur. It is to be accompanied by a notice signed by the solicitors for the applicant and in a form approved by the Registrar informing Dr. Kerrison that he remains entitled to apply to the court for an order, the effect of which is to recognize that the contempt has been purged. The notice is to state that any such application may be made at any time and from time to time and either before or after his arrest. I reserve to both parties liberty to speak to the minutes.